Question 1

Without government intervention, public goods tend to be

Accepted Answer

A)  overproduced and common resources tend to be overconsumed. 
B)  overproduced and common resources tend to be underconsumed. 
C)  underproduced and common resources tend to be overconsumed. 
D)  underproduced and common resources tend to be underconsumed. 
A)  overproduced and common resources tend to be overconsumed. 
B)  overproduced and common resources tend to be underconsumed. 
C)  underproduced and common resources tend to be overconsumed. 
D)  underproduced and common resources tend to be underconsumed.

Question 2

Which of the following statements is correct?

Accepted Answer

A)  The efficient provision of private goods is intrinsically more difficult than the efficient provision of public goods. 
B)  The efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods. 
C)  Private markets provide quantities of public goods that exceed the socially-efficient quantities of those goods. 
D)  Private decision makers utilize quantities of common resources that fall short of the socially-efficient quantities of those resources. 
A)  The efficient provision of private goods is intrinsically more difficult than the efficient provision of public goods. 
B)  The efficient provision of public goods is intrinsically more difficult than the efficient provision of private goods. 
C)  Private markets provide quantities of public goods that exceed the socially-efficient quantities of those goods. 
D)  Private decision makers utilize quantities of common resources that fall short of the socially-efficient quantities of those resources.

Question 3

The free-rider problem exists with

Accepted Answer

A)  public transportation 
B)  knowledge. 
C)  online music subscriptions. 
D)  All of the above are correct. 
A)  public transportation 
B)  knowledge. 
C)  online music subscriptions. 
D)  All of the above are correct.

Question 4

A congested side street in your neighborhood is

Accepted Answer

A)  excludable and rival in consumption. 
B)  excludable and not rival in consumption. 
C)  not excludable and rival in consumption. 
D)  not excludable and not rival in consumption. 
A)  excludable and rival in consumption. 
B)  excludable and not rival in consumption. 
C)  not excludable and rival in consumption. 
D)  not excludable and not rival in consumption.

Question 5

A cost-benefit analysis of a highway is difficult to conduct because analysts

Accepted Answer

A)  cannot estimate the explicit cost of a project that has not been completed. 
B)  are unlikely to have access to costs on similar projects. 
C)  are not able to consider the opportunity cost of resources. 
D)  will have difficulty estimating the value of the highway. 
A)  cannot estimate the explicit cost of a project that has not been completed. 
B)  are unlikely to have access to costs on similar projects. 
C)  are not able to consider the opportunity cost of resources. 
D)  will have difficulty estimating the value of the highway.

Question 6

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Accepted Answer

A)  rival in consumption and is excludable. 
B)  not rival in consumption, but is excludable. 
C)  rival in consumption, but is not excludable. 
D)  not rival in consumption nor is it excludable. 
A)  rival in consumption and is excludable. 
B)  not rival in consumption, but is excludable. 
C)  rival in consumption, but is not excludable. 
D)  not rival in consumption nor is it excludable.

Question 7

Private companies will invest in medical research if

Accepted Answer

A)  they will produce general knowledge. 
B)  they will produce a specific product for which they may receive a patent. 
C)  there is no government intervention in the market for medical products. 
D)  others will benefit from their discoveries. 
A)  they will produce general knowledge. 
B)  they will produce a specific product for which they may receive a patent. 
C)  there is no government intervention in the market for medical products. 
D)  others will benefit from their discoveries.

Question 8

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

Accepted Answer

A)  regulating the use or consumption of the common resource. 
B)  taxing the use or consumption of the common resource. 
C)  selling the common resource to a private entity. 
D)  asking individuals to voluntarily reduce their use of the resource. 
A)  regulating the use or consumption of the common resource. 
B)  taxing the use or consumption of the common resource. 
C)  selling the common resource to a private entity. 
D)  asking individuals to voluntarily reduce their use of the resource.

Question 9

Elephant populations in some African countries have started to rise because

Accepted Answer

A)  environmentalists have developed effective educational campaigns. 
B)  the value of ivory has decreased. 
C)  some elephants have been made a private good, and people are allowed to kill elephants on their own property. 
D)  regulations are being enforced more forcefully. 
A)  environmentalists have developed effective educational campaigns. 
B)  the value of ivory has decreased. 
C)  some elephants have been made a private good, and people are allowed to kill elephants on their own property. 
D)  regulations are being enforced more forcefully.

Question 10

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
  
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which business owner(s) would be opposed to having any ferry trips?

Accepted Answer

A)  only the owner of Store B 
B)  only the owners of Stores A and B 
C)  only the owners of Stores A and B and Restaurant 2 
D)  All 4 business owners would be opposed to paying for any ferry trips. 
A)  only the owner of Store B 
B)  only the owners of Stores A and B 
C)  only the owners of Stores A and B and Restaurant 2 
D)  All 4 business owners would be opposed to paying for any ferry trips.

Question 11

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

Accepted Answer

A)  3.5 percentage points. 
B)  5.5 percentage points. 
C)  6.1 percentage points. 
D)  9.0 percentage points. 
A)  3.5 percentage points. 
B)  5.5 percentage points. 
C)  6.1 percentage points. 
D)  9.0 percentage points.

Question 12

The old lyric "the best things in life are free"

Accepted Answer

A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market. 
A)  is not true for any goods. 
B)  is even true for some goods that have a price. 
C)  refers to goods provided by nature or the government. 
D)  refers to goods provided by the market.

Question 13

Figure 11-1
  
-Refer to Figure 11-1. The box labeled D represents

Accepted Answer

A)  private goods. 
B)  club goods. 
C)  common resources. 
D)  public goods. 
A)  private goods. 
B)  club goods. 
C)  common resources. 
D)  public goods.

Question 14

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75. This toll bought the drivers who paid it a 27 minute time savings. Which of the following is correct?

Accepted Answer

A)  For some consumers, the toll was less than the opportunity cost of the time they would have spent in traffic. 
B)  For some consumers, the toll was more than the opportunity cost of the time they would have spent in traffic. 
C)  No consumers would find this toll worth the time saved in traffic. 
D)  Both a and b are correct. 
A)  For some consumers, the toll was less than the opportunity cost of the time they would have spent in traffic. 
B)  For some consumers, the toll was more than the opportunity cost of the time they would have spent in traffic. 
C)  No consumers would find this toll worth the time saved in traffic. 
D)  Both a and b are correct.

Question 15

Which of the following represents a potential solution to the problem of environmental pollution?

Accepted Answer

A)  corrective taxes 
B)  well established property rights 
C)  government regulation 
D)  All of the above are correct. 
A)  corrective taxes 
B)  well established property rights 
C)  government regulation 
D)  All of the above are correct.

Question 16

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

Accepted Answer

A) True 
 B)False

Question 17

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

Accepted Answer

A)  drive at times other than rush hour. 
B)  use public transit rather than driving. 
C)  drive more fuel-efficient cars. 
D)  car-pool. 
A)  drive at times other than rush hour. 
B)  use public transit rather than driving. 
C)  drive more fuel-efficient cars. 
D)  car-pool.

Question 18

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

Accepted Answer

A) True 
 B)False

Question 19

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Accepted Answer

A) True 
 B)False

Question 20

Advocates of antipoverty programs claim that

Accepted Answer

A)  the government has good information about what people are willing to pay to eliminate poverty. 
B)  fighting poverty is a public good. 
C)  private sector will incur higher costs than the public sector for these programs. 
D)  All of the above are correct. 
A)  the government has good information about what people are willing to pay to eliminate poverty. 
B)  fighting poverty is a public good. 
C)  private sector will incur higher costs than the public sector for these programs. 
D)  All of the above are correct.

Exam 11: Public Goods and Common Resources

Without government intervention, public goods tend to be

Which of the following statements is correct?

The free-rider problem exists with

A congested side street in your neighborhood is

A cost-benefit analysis of a highway is difficult to conduct because analysts

At the local park there is a playground that anyone may use. There is rarely anyone using the playground, so children who use the playground receive full enjoyment from its use. The playground is

Private companies will invest in medical research if

Each of the following is likely to be a successful way for the government to solve the problem of overuse of a common resource except

Elephant populations in some African countries have started to rise because

After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. If a human life is worth $9 million, the crime fighting initiative is worth the cost if it reduces the risk of someone dying from crime by at least

The old lyric "the best things in life are free"

Figure 11-1 -Refer to Figure 11-1. The box labeled D represents

A variable toll on a road in Washington reached a high during the evening rush hour of $5.75. This toll bought the drivers who paid it a 27 minute time savings. Which of the following is correct?

Which of the following represents a potential solution to the problem of environmental pollution?

Government intervention cannot improve the allocation of resources for goods that do not have prices attached to them.

A toll collected from each car traveling during rush hour on a congested road is an effective correction to the Tragedy of the Commons for all of the following reasons except the toll provides an incentive for commuters to

A good that is rival in consumption is one that someone can be prevented from using if she did not pay for it.

In the Tragedy of the Commons, joint action among the individual citizens would be necessary to solve their common resource problem unless the government intervenes.

Advocates of antipoverty programs claim that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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